Section 44ae

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Querist : Anonymous

Querist : Anonymous (Querist)

08 December 2011 Respected Members

I am into my transport business and own 3 Heavy Motor Vehicles ( Trucks ).I want to know that can I show Net profit of 6 Lakhs in my Balance sheet and still file the Income Tax Returns u/s 44 AE @ 5000/- Per Trucks per Month.

Please solve my Quiries by giving some refrences of case studies if possible.
Thanks in advance.

Hemant Sureka

Aijaz Shaikh

Aijaz Shaikh (Expert)
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08 December 2011 44AE. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee, who owns not more than ten goods carriages 30 [at any time during the previous year] and who is engaged in the business of plying, hiring or leasing such goods carriages, the income of such business chargeable to tax under the head “Profits and gains of business or profession” shall be deemed to be the aggregate of the profits and gains, from all the goods carriages owned by him in the previous year, computed in accordance with the provisions of sub-section (2).

31 [(2) For the purposes of sub-section (1), the profits and gains from each goods carriage,—

(i) being a heavy goods vehicle, shall be an amount equal to five thousand rupees for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher;

(ii) other than a heavy goods vehicle, shall be an amount equal to four thousand five hundred rupees for every month or part of a month during which the goods carriage is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher.]

Conclusion:-
You should show higher of two:-
-Profits as per books.
-5000 per month per truck.
Hence you should show profit of 6,00,000/- otherwise there can be concealment penalty u/s 271(c) upto 3times the tax that is evaded.

CA AYUSH AGRAWAL

CA AYUSH AGRAWAL (Expert)
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08 December 2011 You Can Show 5000/- PT Profit , Or You Can Show Your actual Profit as Per Books, But Not Low to 5000 PM PT.

So In UR Case, You Can Show 5000 or 6L (Since Higher Than 5000 Condition) as U Wish

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Querist : Anonymous

Querist : Anonymous (Querist)

08 December 2011 I got opposite answers from 2 respected members...need more help please...

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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09 December 2011 the first answer is correct
u cannot have both the worlds
either u show book profit or show income as per 44AE and claim that u do not maintain books
CA MANOJ GUPTA
JODHPUR
09828510543

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2011 I am also hiring Heavy vehicles from the local market to execute my customes orders with my pre-owned 3 Trucks.Can I still file returns u/s 44AE or I have to segregrate the turnovers of my self owned Trucks and the turnover made by the market acquired Trucks.
Thanks in advance.

Aijaz Shaikh

Aijaz Shaikh (Expert)
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09 December 2011 If books are not maintained:

There will be two business
Owned truck- 44AE is applicable
Lease truck- 44AD is applicable i.e 8% of gross receipts

If books are maintained:
Owned truck: Profits as per books
Profits as per 44AE whichever is higher

Lease truck- Profits as per books
Profits as per 44AD whichever is higher

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2011 Dear Sir section 44AD is applied only if the turnover is below 60 lakhs and my turnover is more than 60 lakhs of the market acquired Trucks.....please guide Thanks

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CS, Deepak Pratap Singh

CS, Deepak Pratap Singh (Expert)
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10 December 2011 Since your turnover is more than 60 lakhs then you will fall u/s. 44AD and an audit of accounts is necessary and compulsory and maintenance of books as per provisions of Income Tax Act, 1961 is also necessary. In this case you can offer less profit than u/s. 44AE.

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2011 Dear Deepak Ji
I beg to correct its Sec 44AB in your reply instead of Sec 44AD. Now my Question is :

I am running both the business in the same proprietorship firm. Please guide me that if I file returns u/s 44AE for my owned Trucks turnover @ RS 5000/- Per Truck/Month , then how I am liable to maintain books of Account for the same and how will I maintain the books of Accounts for the turnover from the other Business as for both the business the cash books , bank books , PL & BS etc are the same.Do I have to maintain the books of Accounts even if I file u/s 44AE?

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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10 December 2011 Section 44AE is applicable in respect of owned trucks.
If after excluding turnover of own trucks the total tornover of ur business is more that 60Lakhs then u have to get books audited in respect of that business. Since u are having only one set of books then u will have to go for audit of entire business so as to avoide penalty etc.
U can refer to decision in Anil Ramgopal Mali (HUF) v. Asstt. CIT (2011) 38 (II) ITCL 39 (Pune ‘A’-Trib) in this regard. In that judgment it was held that if turnover after excluding turnover of owned trucks was less than 40 lakhs[The limit at that time] then no tax audit was required
CA MANOJ GUPTA
JODHPUR
09828510543

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2011 Thanks Sir

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Querist : Anonymous

Querist : Anonymous (Querist)

04 January 2012 Dear Sirs I want to do trading business in the same prop. Firm in which I am running transport business.Can I do both business in single Firm?